Montpelier looks to create TIF district

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MONTPELIER, Vt. (WCAX) Vermont's capital city is seeking changes to its downtown including a new hotel, parking garage and housing. Montpelier city officials want to stimulate economic growth. They think creating a tax increment financing district or TIF to help fund public infrastructure projects is the answer.

"We're an old city with old infrastructure, so a lot of development projects need public infrastructure for them to happen," Montpelier City Manager Bill Fraser said.

In a TIF district, cities and towns can capture new property tax revenue generated by private investment to fund public infrastructure projects. The Legislature has expanded the program, allowing for six new TIF districts.

"The theory with TIF is that the new tax revenue from those projects will help pay for these public projects," Fraser said.

Without the public investment, developers may not pursue projects. But opponents say the program diverts revenue from local general funds and the state's education fund.

Voters must approve bonds for the public projects. The new tax revenue is used to pay off the debt. Private developers receive no additional benefit.

Fraser says Montpelier is considering new water and sewer lines, and a downtown parking garage that would serve the public, as well as a new hotel and apartments.

"Those are all public projects the public will benefit from but also allow private development to happen," Fraser said.

Christ Episcopal Church hopes to build up to 27 new housing units on its property by knocking down the existing parish center.

"It is underutilized," said Steve Dale, the chair of the Christ Church Housing Committee.

The 1930s structure needs updates but the church wants to raze it and build new living space instead.

"The number one pressing need in Montpelier is affordable housing, so that's the route we've been on for the last two years," Dale said.

But a proposed parking garage-- part of a new hotel-- must be shifted to make room for the future housing units.

"We've done some brokering, we've talked to both parties. We certainly hope they both happen. We need affordable housing downtown. We need a hotel downtown," Fraser said.

Dale says progress is being made.

"Little by little many of our biggest concerns have been addressed," he said.

The City Council will consider the TIF proposal in May and state approval could come this summer. Then, the city can propose public projects on the ballot in November or March of next year.